The greenback edged higher as Trump’s healthcare legislation vote set for today. The votes will gain from the congress will drive the confidence of the U.S. market participants. Sterling is about to end the week positive against the majors, while Brexit negotiations begin on Wednesday and euro await the Market PMIs to gain some momentum.
U.S. Dollar Index May Snap a 4-day Negative Streak
The U.S. dollar takes a breath following the last days’ downward pressure, amid U.S. President Donald Trump battle to pass his health care legislation through the congress. The prospect that the continually postponed vote for the legislation, to repeal Obamacare plan and adopt Trump’s plan, will take place today, helped the U.S. dollar to recover some of its losses on Friday morning according to the ICE U.S. dollar index. The index that shows greenback’s performance against the G10 basket of currencies, recorded four negative days in a row since Monday but there are signs that today, may snap this four-day streak. Moreover, according to our chart below, the gains the greenback earned during the morning hours today, were enough to push it above the levels has been on Thursday morning against its major counterparts.
The raised concerns are backed from the worries that if Trump fails to convince congress to vote for his health care program, he will find even more troubles for the more market-sensitive plans of infrastructure spending and corporate tax cuts. The latest mentioned reforms were the reasons many U.S. citizens supported him. A success to the plan, will push the dollar significantly higher against its peers, however, if the president does not collect enough number of votes, the disappointment over Trump’s ability to push the other reforms, will add heavy pressure on the domestic currency.
USD/JPY – Technical Outlook
The U.S dollar plummeted more than 1% against the Japanese yen so far this week and challenged again the 38.2% Fibonacci retracement level, near 111.10, of the last upward move with low on June 24th of 2016 and high on December 15th of 2016. However, the price of USD/JPY failed to end the day below the latter level and currently is developing slightly below the 111.60 strong resistance level. The aforementioned fibo level acts as a significant support barrier as it pushes the price higher.
On the daily chart, the technical structure remains bearish to neutral, with the pair meeting some short-term selling interest around 111.60 until the 200-daily SMA near 108.80 which overlaps with the 50.0% Fibo level. Despite that, a jump above 111.60, it will expose the price towards 112.90. The MACD oscillator is falling and is still strengthening its negative momentum. The RSI indicator rebounded on the 30 level and is pointing upwards.
British Pound On Path to End the Week with Profit
The sterling also recorded gains on Thursday and early Friday against the majors, expect the U.S. dollar and the Japanese yen. Overall the currency is about to end the week significantly higher its opening levels. The retail sales released yesterday were optimistic for the economy which is one step before the beginning of Brexit negotiations on Friday. On annual basis, the retail sales grew by 3.7% in February above market expectations of 2.6% and 1% the previous month. Today, the only indicator scheduled for release from U.K. is BBA mortgage approvals for January.
GBP/USD – Technical Outlook
TheGBP/USD pair edged sharply higher since last week and surged more than 2.4%. After the pullback on the 1.2100 psychological support level, the price had an aggressive run and hit the 1.2530 resistance barrier. This week is another green session for the pair as it rose above the 50 and 100 daily SMAs. However, early in the morning, the pair showed its intention for some bearish move and met the short-term ascending trend line. A break of the latter obstacle to the downside, it will open the door for the 1.2425 handle. Otherwise, a run above 1.2530, will drive the price towards 1.2570.
Technically, technical indicators are falling on short-term charts as both the Stochastic and RSI are moving lower. RSI is trying to hit the 50 level whilst stochastic is strengthening into the negative territory. Nevertheless, the price is still developing above the three moving averages (50, 100 and 200 SMAs) while the 50-SMA had a bullish crossover with the 100-SMA and is in progress for a cross with 200-SMA as well, indicating upward move for the next sessions.
Euro Mixed Ahead of Markit PMIs
The euro has been traded mixed during the week as well as during yesterday's and early in the morning today's trading sessions. Eurozone’s consumer confidence improved to -5 in March, compared to -6.2 in February, but remains in the negative area. Today, the traders will watch closely the Markit PMIs for Germany and Euro area as a whole.
EUR/USD – Technical Outlook
The euro traded lower and weakened further against the greenback over the last couple of days as well as early this morning. Following the rebound on the 1.0830 resistance level, the EUR/USD pair fell more than 0.4% and is moving towards the next support at 1.0720. However, the price is printing the fourth positive week in a row and added 1.8% at its value so far this month. Moreover, if the price climbs above 1.0830, we could see a run until the 50-weekly SMA near 1.0950.
From a technical point of view, the trend remains bullish on a medium-term basis as MACD and RSI are rising. On the daily chart, the stochastic oscillator is moving lower after the bounce off the overbought area whilst the RSI indicator is falling and is approaching its mid-level.
What to Watch Today
Both the Markit services and manufacturing PMIs for U.S., Eurozone and Germany, are expected as well as U.S. durable goods orders. Markit PMIs are forecasted to show that Eurozone’s manufacturing slipped to 55.3 in March from 55.4 and the services sector to 55.4 from 55.5 before. The U.S. services sector is expected to show an expansion of the sector to 54.0 versus 53.8 before, while no forecast is available for the manufacturing sector. U.S. durable goods orders are predicted to have edged lower to 1.2% from 2.0% in January. The Canadian inflation report is also scheduled for release.